Strategy allows advisors to help clients access funds without damaging their portfolio
This article was provided by HomeEquity Bank.
In 2020, as Canadians spent more time at home, there was a boom in home renovations. According to the RE/MAX 2021 Renovation Investment Report, 74% of Canadians made renovations – 29% for aesthetic or recreational purposes, 29% for safety or maintenance reasons, and 16% to increase the market value of their home.
And the boom didn’t stop when lockdowns started to ease. According to consumer lender Simply Group, the second quarter of 2021 saw a 30% increase in home renovation loan applications compared to Q1, a trend that is set to continue as people prepare their homes for the colder months.
But your 55+ clients have another reason to make sure home is the most comfortable place to be. The care-home crisis during the pandemic highlighted the importance of aging in place. In fact, 93% of Canadians say they want to remain in their own home after they retire. However, costly renovations are often needed to achieve this.
Why the CHIP Reverse Mortgage is the best option to finance home renovations
The uptake of reverse mortgages has soared over the past decade. As of 2020, they were worth more than $4.4 billion, with many Canadians choosing them as a strategic financial tool for their retirement.
The CHIP Reverse Mortgage – which allows your 55+ clients to access up to 55% of the value of their home – has been gaining popularity among high-net-worth individuals as it offers a way to access large sums of money without withdrawing from taxable financial assets. Since reverse mortgage funds are tax-free, your HNW clients can avoid increasing their marginal tax rate and triggering clawback of income-assessed government benefits. As such, the CHIP program is an effective cash-flow and tax-management tool.
It also allows HNW individuals to keep their portfolio intact along with any income it provides, helping them maintain their lifestyle in retirement while making their home the best place to spend their golden years.
And that’s not all. With the CHIP Reverse Mortgage, your clients can utilize some of the equity in their home that had previously been inactive. However, since they still own their property, they continue to benefit from the appreciation in the value of the remaining equity.
Which CHIP product is right for your clients?
HomeEquity Bank offers a range of reverse mortgage solutions depending on your clients’ needs. The flagship product, the CHIP Reverse Mortgage, allows clients to defer repayment indefinitely since they only pay back what they owe when they pass away or move out of their home.
HomeEquity Bank’s newest product, CHIP Open, on the other hand, is ideal for those who plan to pay off the loan in the shorter term. It has no pre-payment fees, allowing customers to repay the entire amount at any time. Alternatively, if your clients decide they don’t want to repay the loan, they can easily convert it to the CHIP Reverse Mortgage and take advantage of a lower rate of interest.
How you can boost your business with the CHIP Reverse Mortgage
Introducing your 55+ clients to the CHIP Reverse Mortgage will give your business a competitive edge by allowing you to better serve this trillion-dollar segment with innovative solutions to their cashflow needs. It will therefore help you grow your business, as well as maintain existing assets under management.
The CHIP Reverse Mortgage can be a highly effective financial tool for your HNW clients looking to add value to their home without damaging their investment portfolio or triggering unnecessary taxes. To learn more about how the CHIP program can help you clients, head to chipadvisor.ca/wealth.
HomeEquity Bank is a provider of reverse mortgages to Canadian homeowners and has been a leading underwriter of reverse mortgages in Canada for the past 30 years.
